What The Doctor Ordered

How would you assess your business performance to date, compared with the results of 2013?

The pharmaceuticals market saw remarkable growth in 2013; however, in 2014 we are experiencing much lower growth. This year we had a devaluation of the national currency. Because Kazakhstan’s market depends on imports, consumers faced a 20-25% increase in the cost of products from the pharmaceutical industry. The government is trying to control the prices, and is working with distributors to keep the price low. Right now, customers can see that their prices have started to rise. For the local products, however, prices have not changed significantly. This is the key issue in 2014.

VIVA Pharm pursues a comprehensive approach to the pharmaceutical industry: how is your logistics department contributing to your services in Kazakhstan and the broader region?

VIVA Pharm delivers new technology and products that we cannot produce in our facilities. We import injectable products and new technology that we cannot produce in Kazakhstan. Whenever possible, we produce generic equivalents locally. Barring that, we import international products from major companies. When we import, we bring new technology. However, when we make local products—our generics—we do so at a lower cost. This is in line with local government objectives, and is beneficial to the customer. Our company works with our customer’s interests at heart. We sell to the Kazakhstani government-held company SK Pharma. In our country, the government hospitals receive products through this company. SK Pharma usually announces a tender every year; it buys medicines and then distributes them to hospitals.

What is the importance of human capital here?

In our country we say, “People and human resources are the most important part of the business.” We are proud of our team. VIVA Pharm has an adept regulatory department that works with the Ministry of Health on approvals. To bring medicine to the market, it is necessary to submit files and samples to the Ministry of Health, and submit the product for testing and analysis. Our regulatory team brings new technology from abroad and performs the registration of our local products. VIVA Pharm sends its staff to various training sessions and to pharmaceutical exhibitions so that they can interact with the business community and learn about other markets.

Is establishing joint ventures part of your business model?

We are currently in negotiations with a number of international companies to create new joint ventures. These companies produce in their countries, and already have the experience for specific products. Our company wants to bring their products here, to Kazakhstan. The current economic environment in Kazakhstan is welcoming to foreign investors. We want them to bring their knowledge and capital to Kazakhstan, and the government will buy their products and support their local production. This is why we are inviting companies from Israel, India, and even Ukraine. Ukraine needs new markets, and its pharmaceutical producers have remarkable experience in this industry.

How would you evaluate the legislation for this sector in Kazakhstan?

I have suggested that our Ministry of Health allow pharmacies to offer generics first. This is already an established practice in parts of Europe, and it should be imported to Kazakhstan. This will mandate that the pharmacist offers generics first instead of original drugs as a way to save costs. In terms of legislation, we are in the process of establishing a Customs Union with Russia. But right now, we have different legislation. In Kazakhstan, we even have different packaging. There is both Kazakh stani and Russian packaging in this country, whereas in Russia there is only Russian packaging. To bring new products to the market here, the Ministry of Health must approve them. The next step for the Ministry of Health is to agree on one requirement.